Colder-than-normal December temperatures in the Northeast and Northwest could bolster natural gas prices, according to forecasters, but the Southwest will remain warmer than normal and high levels of gas storage could blunt any price increases.

Forecasting firm Weather Services International expects "natural gas prices to be supported heading into winter," Chris Kostas, senior power and gas analyst at independent research firm Energy Security Analysis, said in a WSI press release. "Natural gas prices are often supported in December, as expectations for even colder temperatures in January defer discretionary withdrawals from storage."

However, he says this upside may be limited and that beyond December, the forecast remains fuzzy for the West.

"This year, we have neither an El Niño nor a La Niña event; we are effectively 'neutral' or 'normal,'" says Todd Crawford, WSI's chief meteorologist. Most models suggest "a pattern more typical of a La Niña event, that is, generally warm and dry in California and cooler and wetter across the Pacific Northwest."

Maurice Roos, chief hydrologist for the California Department of Water Resources, concurs, saying winter could prove drier than average, although in years with similar conditions, he notes, "sometimes we have had a 'pineapple connection' flood" -- which happens when precipitation falls as rain rather than snow.

Roos says it is too early to predict the California snowpack. Thus far, the agency's sensor network recorded 1 inch of water content in the southern Sierra Nevada range, while 5.5 inches of snow has accumulated in the northern Sierra since Oct. 1.

As of Nov. 1, statewide reservoir storage was estimated at about 95 percent of average, which Roos says is "better than expected in a dry year because of some carryover from the very wet 2011."

In its winter assessment, FERC says spot and futures prices for natural gas are at their lowest levels in 10 years. High production and ample supply "should help keep natural gas prices relatively low into the winter assuming normal winter weather, and also help moderate electric prices."

Working gas in storage was 3,873 Bcf as of Friday, Nov. 16, according to U.S. Energy Information Administration estimates, a net decrease of 38 Bcf from the previous week. Storage levels are 0.6 percent greater than a year ago and 4.5 percent above the five-year average.

In the Wednesday-to-Wednesday trading period, Western prices for peak power generally lost value. South of Path 15 led losers, down about $5.10 to roughly $35.60/MWh. Palo Verde posted the only gains, up roughly $5.75 to about $31.65/MWh
[Linda Dailey Paulson].

Editor's note: This will be the only Western Price Survey report this week due to the Thanksgiving holiday.

Archives of the Western Price Survey for the past year are also available online.

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